As an investor, to increase the likelihood of outperforming inflation and achieving favourable returns, it is advisable to make long-term investments. Still, to make good returns, you might want to consider adding some megatrend investments to your portfolio. You’ve come to the right place if you want to know the reasons why megatrends should form part of your investment plan.
| What are some examples of investing in megatrends? | Renewable energy, e-commerce, robotics and automation, digital payments, and healthcare. |
| Are investing in megatrends risky? | Definitely. Megatrend may have significant volatility and uncertainty. Always conduct thorough research and analysis before investing |
| How do I invest in megatrends? | Through various investment vehicles, such as exchange-traded funds (ETFs), mutual funds, or individual stocks. |
| Are megatrends investing suitable for all investors? | No, megatrends may not be suitable for all investors. Ensure that megatrends align with your overall investment goals and risk tolerance. |
This Moneyfarm blog will tell you all you need to know about megatrends and, in particular, the benefits of thematic investing.
What are megatrends?
Megatrends are trends that disrupt the market and result in irreversible changes to the world in which we live. They have the power to change the global social, economic, and political landscape.
Although the term “megatrend” is relatively new (an American author called James Naisbitt first coined it in his book entitled – Megatrends – Ten New Directions Transforming Our Lives, in 1982), the concept is not. To comprehend the main idea, you only have to think about things like electricity, the automobile, mobile phone technology, and the World Wide Web.
From an investment point of view, spotting these megatrends and investing in them early on can have substantial financial benefits, although, of course, any sort of investment carries risk.
What are the current main megatrends
The current megatrends include things like:
- Climate change and sustainability technology
- Demographic and social evolution
- Technological breakthroughs
Each of the three categories shown above is an umbrella term covering a multitude of elements. Climate change, for example, encompasses carbon collection and reduction, water conservation, and green energy. Demographic and social evolution covers healthcare innovation and technology, pharmaceutical research, smart cities, and rapid organisation. Technological breakthroughs include cyber security, electric car design, robotics and even space exploration.
Most experts agree there are five megatrends in total. In addition to the three shown above. The other two are the shift of economic power and rapid urbanisation.
The megatrends leading to 2030
As we look further ahead, other sectors that could be included on the global megatrends 2030 highway are things like the potential to invest in the metaverse, a remodelling of the global supply chain set-up, and innovation in the food sector as we look towards feeding an ever-growing global population.
Why it‘s important to invest in a megatrend
There are two reasons why you should invest now in megatrends. One is that investing money in them makes them an even stronger force for change, and much of that change (like climate control, sustainability and feeding an expanding global population) is not only desirable but essential.
The other is from a personal wealth point of view. You invest to make money, and as global megatrends are changing the world in which we live, socially and economically, the businesses that succeed in helping to drive these trends and megatrends will prosper, and so should those who invest in them.
Megatrends and ETFs
If you are just starting your “how to invest money” journey, you will probably be unaware of ETFs. They are, however, investment vehicles you need to know about, as they are one of the safer ways of investing. The Initials “ETF” stand for “exchange-traded fund”.
What is an ETF? An ETF is a type of financial investment vehicle. Rather than investing in one particular company, an ETF is a pooled investment fund made up of assets, such as stocks, bonds, or commodities, and is traded on a stock exchange. An ETF is similar to a mutual fund. However, an ETF, which tracks a particular commodity, index, sector, or other types of assets, is unlike a mutual fund, as it trades like stocks on an exchange.
The exciting news is that you can now invest in ETF accounts that include megatrends. It’s something known as thematic investing, and if you take this approach through Moneyfarm, you can gain access to ETFs offered by some of the top names in the investment world – names including Legal and General, VanEck, and WisdomTree.
Invest in megatrends with Moneyfarm
Thematic investing is popular with many investors, and rightly so. At Moneyfarm, we have taken it to the next level by giving you the opportunity to invest in megatrends changing the world and beyond.
If you’re asking yourself what are thematic investments, we can answer by telling you that your investments will reflect technological innovation trends, demographic and social changes trends, and sustainability trends and will be appropriate in the long term because our team of in-house experts review them on an annual basis to ensure they always reflect current global megatrends.
The core-satellite approach to thematic investing
Any sort of investment carries risk. However, thematic investments reduce the amount of risk by not only backing megatrends that will change the world in which we live but by being long-term investments too.
To reduce the risk factor even further, Moneyfarm has developed a core-satellite approach. It means that the core of your investment portfolio consists of low-cost, broad-based index and exchange-traded funds.
The satellite part of our core-satellite philosophy is where the megatrend themes are kept. These are all targeted high-growth long-term investments. You can choose from one of four themes to add to your portfolios depending on your preference, targeted at democratic and social change, sustainability, technical innovation, or a more multi-trend approach. The diversity of the megatrend ETF portfolios we’ve created, and our article on investment themes 2023, play a part in helping to lower risk.
Useful tips for megatrend investing
Here are a few tips to help you to get the best from thematic investing.
- Ensure your portfolio is well balanced and that it is professionally and actively managed, which helps in reducing risk.
- Only choose thematic investments if you intend to invest long-term.
- Only invest an amount you feel comfortable with. To limit risk, Moneyfarm only allows you to invest up to 20% of your total portfolio value in thematic megatrends.
- If you are constructing your own thematic investment portfolio, remember that small start-ups can be riskier propositions.
Trading with Moneyfarm Share Investing
If you decide that thematic investing in megatrends is for you and are keen on diving into the world of share trading, Moneyfarm’s Share Investing platform is your ideal companion. It enables the direct trading of shares and is crafted for compatibility, it seamlessly operates on desktops, laptops, and mobile devices, regardless of whether they run on Android or iOS.
The platform includes a broad array of UK stocks, ETFs, and mutual funds, allowing for participation in various market sectors and investment styles. Moreover, it offers the option to invest in a globally diversified, professionally managed portfolio, ensuring a variety of choices to align with your investment strategy and financial objectives. Our service is designed with a long-term investment focus, ensuring you benefit from our technology and the guidance of our investment consultants. This approach helps you align your portfolio with your values and financial goals, providing a detailed view of your investments for effective decision-making.
Moneyfarm’s Share Investing platform supports your investment journey, whether you’re investing in familiar companies, exploring various sectors, engaging with ETFs, or expanding your scope with our UK Mutual Funds, ensuring a personalized and insightful investment experience. No matter your investment path, you’ll find Moneyfarm’s share investing platform an indispensable resource.
FAQ
Why is investing in megatrends important?
Investing in megatrends can provide investors with exposure to high-growth sectors, diversify their portfolios, and potentially provide higher returns over the long term.
What is the difference between thematic investing and traditional investing?
Traditional investing sometimes concentrates on individual stocks and shares. Thematic investing takes a much broader approach. The four packages that Moneyfarm offer are based on a wide section of investments in different specific themes.
How many themes can I invest in?
You can choose as many themes as you like. The most diversified is our multi-trend growth theme containing investments across themes, such as those related to society, sustainability, and technology.
Is thematic investing in megatrends suitable for me?
Yes, particularly if you have conservationist values. You can choose megatrends and themes that complement your personal preferences, safe in the knowledge that if Moneyfarm is your financial adviser, your risk will be actively managed.
*As with all investing, financial instruments involve inherent risks, including loss of capital, market fluctuations and liquidity risk. Past performance is no guarantee of future results. It is important to consider your risk tolerance and investment objectives before proceeding.
